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Thursday, December 4, 2014

Daily update 12/4

My internet service went down yesterday afternoon and they did not get it fixed until today.  The service has been so reliable for so many years I don't have a backup for it.  Hopefully that won't happen again anytime soon.  After I got my service back and my datafeed going again I noticed SPX was almost exactly where it was when the service failed.  Good time for it to happen!

The market looks a little weaker then SPX would indicate today.  Here is the daily chart.

SPX made a slight new intraday high and close yesterday.  It made another slight new intraday high today, but sold off a bit in the afternoon.  Despite SPX only being down 2 points the breadth was 62% negative.  As a further sign of weak internals there were 184 new highs and 123 new lows today.  In all the years I have been doing this the only time I saw more then 100 new lows while SPX was making new highs was in early 2000.  Despite what it might look like from the charts of the major indexes this market is not healthy.  It keeps getting weaker and weaker despite SPX making new highs since July.  This still looks like it might be a megaphone top pattern.  Very bullish sentiment and very weak internals usually leads to a longer lasting correction or bear market.  SPX has been at new highs long enough for the internal divergences to clean up if that was going to happen.  It looks very likely this is a blow off top and will probably dip pretty strongly once the buyers run out.  Lets take a look at the breadth chart.

The McClellan oscillator is flipping around the 0 zero line.  A sign of indecision among market participants.  If we end up down tomorrow I think we will test 2040.  If that breaks we are probably on to the 100 DMA (1983) again.  The bulls need to get some gusto going very soon.

The COMPX did not make a new high this week and has now been sideways for 6 days so I have to downgrade the short term trend to neutral.

Interesting article a reader pointed me to Surprising Pockets of Weakness in the U.S. Stock Market


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.